A record-breaking Kentucky Derby helped Churchill Downs Incorporated (CDI) to post record net revenue for a second successive quarter.
Derby Week generated record revenue of $20.5m, with total revenue reaching $768.5m (£592.6m/€690.5m) in Q2. This total was up from $582.5m in the corresponding period last year and $559.5m in Q1.
Meanwhile, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) hit a record $363.7m in Q2 – up from $291.2m year-on-year.
However, CDI registered quarterly net income of $143.0m versus $339.3m the previous year. The decline was due to several one-off factors, including a $193.6m after-tax gain on the sale of the Calder property in 2022.
Accordingly, net income for H1 was down from $381.4m to $298.7m year-on-year.
CDI’s total net revenue for H1 of 2023 was $1.3280bn – up from $946.6m last year. Total operating expenses rose from $699.5m to $982.5m.
Racing and Gaming
The operator singled out particularly impressive results in its Live and Historical Racing and Gaming segments in Q2.
The Live and Historical Racing segment delivered all-time record revenue of $408.0m. The segment also delivered all-time high adjusted EBITDA of $223.5m in Q2. These figures were up by 47.8% and 36.4% respectively from revenue of $275.9m and $163.9m in Q2 last year.
Additionally, CDI cited a $94.6m increase in the segment’s revenue due to the Virginia properties acquired through the Peninsula Pacific Entertainment (P2E) takeover. The acquisition, which was completed in November, was the primary driver of record revenue in Q1.
Properties snapped up in the P2E deal also drove record quarterly revenue and adjusted EBITDA for CDI’s Gaming segment. Revenue was up by 34% to $247.9m while earnings increased by 16% to $123.4m year-on-year.
New York and Iowa properties acquired in the P2E transaction generated $68.6m in Q2 revenue. This was partially offset by a $5.2m net decrease from other gaming properties.
The operator also diversified its income streams in Q2 with two bricks-and-mortar developments.
In Q2, CDI opened First Turn Experience, a new 50,000-square-foot hospitality space with 5,100 additional stadium seats, boosting raceday income. Furthermore, CDI opened a new 123-room hotel, restaurant and sports bar in June in Louisville, Kentucky.
The positive Q2 results are despite disruption due to CDI suspending all racing activity at Churchill Downs Racetrack in early June. Racing remained suspended through the remainder of the Spring Meet after concerns were raised over horse safety.
CDI appears to have maintained momentum after its record-breaking turnover in 2022.